Archive for the 'Issue & Trend' Category

The two lifelong rivals in South Korea’s mobile game genre, Com2uS and Gamevil, are each propelling different strategies for the global mobile game market.
The difference in strategies comes from their contradictory approaches to the recent smartphone boom in Korea and worldwide. Com2uS, the number one mobile game developer in the market, seeks to target the global open market, such as Apple’s App Store; As a part of its strategy, Com2uS plans to develop and release smartphone-based games first, and then to publish them to the feature phone market.

On the other hand, Gamevil is taking a rather different path. Its main focus will be on the feature phones, as it had been in the past, and only those games that were successful in the domestic mobile market will be selected to enter the global market.

(Zenonia, one of Gamevil’s action RPG)

It seems, though, that Gamevil’s choice had been wiser. In the second quarter, Gamevil, who had always been in second place next to Com2uS, surpassed the number one runner both in sales profit and net profit by a large margin. In addition, the Guardian, UK’s leading daily newspaper, recently mentioned Gamevil in its article, Ten essential Google Android games. One of Gamevil’s magnum opuses, Zenonia was introduced in the article as a popular mobile game in the Android market, which boasts of “An amazingly rich and detailed RPG, with loads of weapons, spells and quests, and some truly lovely visuals” according to the Guardian.

Meanwhile, the founder and CEO of Com2uS, Ji Young Park was recently chosen (for the second consecutive time) as one of the top 50 female CEOs in the world by UK’s mobile content monthly magazine, ME . Here’s what ME wrote about Ji Young Park. (source: Mobile Entertainment)

“Park’s passion and ideas have made Com2uS number one in Korea, and a growing presence outside it. The company is well-known for its innovation in both casual and massively muliplayer gaming.”

Overall, an intensified competition is expected to take place among the two rivals as most of their major title games are scheduled for release in the latter half of this year. Let’s wait and see who takes the number one place in Korea’s mobile game market.

Korea Telecom announced yesterday that it is opening up its network to MVNOs (Mobile Virtual Network Operators) and launching MVNO services for the first time in Korea. KT has partnered with “Entaz” (http://www.entaz.com), a mobile contents provider, and with “Free Telecom” and “Evergreen Mobile,” both of which are prepaid service providers. KT will open its mobile network to these selected MVNOs so that they can utilize KT’s network infrastructure to offer inexpensive data and voice services, especially to consumers within a niche market.

(source: JoongAng Daily)

Entaz, Free Telecom, and Evergreen Mobile

Entaz has a mobile portal service called “Free Mobile Town” that provides various contents including mobile game, cartoon, photobook, and ebook services. As Entaz will be taking advantage of KT’s low wholesale rates for data service, consumers will be able to access “Free Mobile Town” contents with no charge for mobile data service itself. While Entaz is utilizing KT’s network for data usage service, the other two are using the network for a prepaid voice call service; “Free Telecom” and “Ever Green Mobile” are targeting foreigners or short-term users, to whom they will offer their services at a low rate thanks to KT’s MVNO policies that aim to create a mobile ecosystem.

The first MVNO service in Korea?

It is only recently (March, 2010) that the Korean government passed a bill allowing the leasing of mobile networks, or MVNO business in the country. Previously, MVNOs were not allowed, and the Korean telecom market was fully dominated by the three MNOs, creating a huge market barrier for new entrants. The advent of MVNO companies is expected to work for the benefit of consumers by driving accelerated price competition into the market. By September 23rd, KCC (Korea Communications Commission) will prepare a complete set of guidelines and regulations for MVNO services. Once the guidelines are out, many changes are bound to take place as SKT, currently holding over a half of the market share, will be legally obliged to open its network, and as other companies, such as Onse Telecom and KCT (Korea Cable Telecom: a consortium of seven cable operators providing VoIP services throughout Korea) have demonstrated their willingness to start a MVNO business.

A fourth MNO in Korea

With KT launching its first MVNO services, which are not yet complete MNOs themselves in that they only offer either data usage service or voice call service, the idea of a fourth MNO in Korea seems to be gradually turning into reality. Soon, mobile phone users in Korea will have more options to choose from, compared to when they had only three choices: SK Telecom, KT, or LG U+. In addition, the advent of KMI (Korea Mobile Internet), a MNO that will be based on mobile WiMAX network and one that will generate many other MVNOS there forth, is imminent as well. (more about KMI at an upcoming entry) It will be interesting to see how such factors will play out in Korea’s telecom market. Meanwhile, let’s wait to see a myriad number of MVNOs rolling out starting from next year.

In Korea, there are three MNOs; SKT, KT, LGT. They respectively possess 50.67%, 31.42%, and 17.91% of the telecom market (April, 2010) according to KCC (Korea Communications Commission). In this series of feature posts dealing with Korea’s three MNOs, I will provide an overview of SKT, KT, and LGT’s survival strategies in approaching Korea’s highly saturated telecom market, and how they seek to go beyond just providing telecommunication service.

LG Telecom’s Taltongsin initiative, “beyond telecommunication”

LG Telecom’s new growth initiative is called Taltongsin, meaning “Beyond Telecommunications.” This strategy aims to strengthen LGT’s core capability as a Telco and at the same time to increase the market pie by collaborating with other industries where LGT’s communication technologies will be able to offer value. It is different from a market expansion strategy in which LGT will enter into other markets to make profit and end up intensifying the market competition. LGT expects to create a new service genre by applying their ICT to the businesses of corporations and SMEs. LGT hopes to contribute to the welfare of Korean citizens through new services and technologies such as Smart Grid and u-City. Overall, LGT’s Taltongsin hopes to vitalize the ecosystem of the IT industry.

LGT’s survival strategy against SKT and KT

LG Group is Korea’s one of the biggest conglomerates operating their business mainly in electronics, telecom, chemical etc. LG Group used to have three different Telcos in its group, which were LGT, LG Dacom and LG Powercom. LGT is ranks 3rd amongst Korea’s three MNOs. LG Dacom provides local and international telephony services, while LG Powercom provides broadband services. These three Telcos in LG group were merged into one entity in January 2010 and began the new era of integrated LGT.

This month, integrated LGT changed its corporate name into LG U+. “U” means creating a new world where customers can enjoy communication technologies and services ubiquitously. “+” means offering more than the traditional telecom services to customers through its enhanced ubiquitous technology. Such a change in name also reveals LGT’s strong intention to stretch their customer base further onto enterprises such as ICT solution providers.

Korea’s telecommunication market, which had been segmented into fixed and mobile, was integrated into one in 2009. For example, KT acquired its mobile arm KTF. SKT acquired Hanaro Telecom and founded SK Broadband. LGT’s merge with LG Dacom and LG Powercom was just another follow up strategy against its bigger competitors. (LGT, as the smallest player, had always followed the market rules set by its bigger competitors.) Since last year, the B2B sector has risen as a new target market among the bigger Telcos, and thus LGT had to respond accordingly to this market change. External market environment, such as the saturated B2C market, was another factor that urged this B2B initiative, as in the other two Telco’s cases as well.

How LGT plans to carry out its Taltongsin initiative

Mr. Lee Sang-Chul, a former minister of Korea’s Ministry of Information Communications, was appointed as new CEO of the integrated LGT in January 2010. His first initiative had been “Taltongsin.” However, it has been moving on rather slowly for the last five months.

In May 2010, LGT announced its plan to raise Taltongsin funds which amounts to 15 billion KRW per year. This fund will let LGT invest in new technologies and acquire companies with high potential. Based on this, LGT will be able to maximize synergy in Taltongsin business areas. The main areas of interests include media, advertising, education, utility, healthcare, and etc.

LGT will select the target to invest in but the operation will be trusted to VC or LG Future Fund – LG group’s R&D fund. To do so, LGT established a dedicated team for this work and made an investment committee in the strategy group. They are in charge of the investment appraisal, execution and management.

What are the prospects for LGT’s Taltongsin initiative?

There are three phases in developing a B2B business; preparing, piloting, and penetrating. I believe LGT is still in the preparation stage while KT and SKT have moved further on to the penetrating and piloting stages. As described in the above, LGT’s Taltongsin initiative is yet to be fully developed. There are neither apparent trials nor achievements other than its funds.

However, the market’s expectation towards LGT’s Taltongsin initiative is quite high. LGT, as the smallest player, has often come up with very clever strategies for its survival. The company is talented at designing unique values that target specific segments of customers. With such strategies, LGT has always managed to go beyond the market order. Some examples of the company’s successful strategies include an FMS (Fixed-Mobile Substitute) service called Givun Zone, which was a strategy against KT’s fixed voice, a full browsing service with a very cheap price plan that made an impact on Korea’s mobile data services. Likewise, industry experts are expecting another surprise from LGT with its new Taltongsin strategy.